Peter Costello

Treasurer

11 March 1996 - 3 December 2007

The All Groups CPI increased by 0.9 per cent in the December quarter
2001, and 3.1 per cent through the year to the end of calendar 2001.

The 0.9 per cent increase in the December quarter follows an increase of 0.3
per cent in the September quarter and the outcomes so far in the financial year
are consistent with Budget forecasts. The large increase in fruit and vegetable
prices in the December quarter should be temporary and a return to more favourable
seasonal conditions should result in fruit and vegetable prices easing over
coming quarters.

In the December quarter, price increases occurred across the majority of items,
with seasonal and one-off factors playing an important role. Price rises were
recorded for fresh fruit and vegetables (up 10.2 per cent, as a result
of adverse seasonal conditions and some supply shortages), domestic holiday
travel and accommodation (up 7.7 per cent, driven by responses to the demise
of Ansett as well as seasonal increases), meat prices (beef and veal prices
rose 5.5 per cent boosted by continued world demand for Australian
produce), clothing and footwear (up 1.4 per cent driven by new season
fashions) and house purchase prices (up 1.1 per cent on strong demand
and record low interest rates).

Petrol prices again declined significantly in the December quarter, by around
3.7 per cent, on the back of falls in global oil prices. This follows the
decline in petrol prices of 8.3 per cent in the September quarter.
Over the past year, petrol prices have declined by 12.2 per cent.

In addition to petrol, price declines were recorded across a range of goods
and services in the December quarter including pharmaceuticals (down 4.8 per cent),
gas and other household fuels (down 4.2 per cent) , and audio visual
and computing equipment (down 1.6 per cent ).

Today's outcome does not alter the outlook for inflation to be within the target
band in 2001-02, and nor does it change the fact that Australia's economy has
continued to weather the current global weakness very well, and is expected
to be one of the world's top-performing economies in 2002.